Toyota executives have been faced with the challenge of organizing the activities of their expanding firm. For example, they must decide how to organize the activities of the company’s salesforce—the tremendous growth means that the company has more customers. Organizing the sales department should help to ensure success if the activities directly reflect company objectives. Management’s specific steps to organize should include analyzing company sales objectives, outlining specific sales activities that must be performed to reach these objectives, designing sales jobs by grouping similar activities, and assigning these sales jobs to company personnel. To supplement these steps, Toyota must be careful not to create overlapping responsibilities, responsibility gaps, or responsibilities for sales activities that do not lead directly to the attainment of Toyota’s goals.

In organizing the activities of employees in a growing organization like Toyota, leadership must recognize, for example, that a manager’s activities, as well as those of subordinates, are a major factor in company success. Because the activity of a department manager can affect all personnel within that department, the activities of the department manager must be well defined. From the viewpoint of company divisions, one department’s activities should be coordinated with those of other departments: For example, the activities of the sales department should be coordinated with the activities of the company’s marketing department.

Overall, for managers at Toyota to be responsible, they must perform the activities they are obligated to perform. Managers in the sales department, for example, are obligated to monitor the performance of all salespeople and to provide unbiased assessments. What’s more, executives in Toyota’s other geographic divisions, such as North America and the United States, must be permitted to use their knowledge and expertise to provide leadership and add value to the company’s operations.

Toyota leadership must be sure that any individuals within the company who are delegated job activities are given a commensurate amount of authority to give orders and carry out those activities. Managers throughout the company must recognize, however, that authority must be accepted if obedience is to be exacted. To increase the probability of acceptance, care should be taken to ensure that individuals understand internal orders and regard those orders as being consistent with the objectives of the department they work in and the objectives of the company. Employees should also perceive the orders they receive as being compatible with their individual interests and should consider themselves mentally and physically able to follow those orders. Management must be careful to delegate jobs only to those organization members who are mentally and physically able to carry them out.

Assuming that one of Toyota’s main objectives is to produce and sell the highest-quality automobiles possible, company personnel who are directly responsible for achieving this objective should possess line authority so that they can perform their responsibilities. For example, individuals responsible for manufacturing cars must be given the right to do everything necessary to produce the highest-quality vehicles possible.

As in all organizations, the potential for conflict between Toyota line and staff personnel could be significant. Management should thus be aware of this possibility and encourage both line and staff personnel to minimize conflict.

Functional authority and accountability are two additional factors that Toyota must consider when organizing employee activities. Some employees may have to be delegated functional authority to supplement the line or staff authority they already have. A Toyota human resource manager (staff person), for example, may need to gather information from the company’s sales department in order to understand whether the company needs to hire additional salespeople. Functional authority would enable human resource staff to command that this information be channeled to them.

In organizing employee activity, Toyota should also stress the concept of accountability—the idea that fulfilling assigned responsibilities brings rewards and not fulfilling them brings negative consequences.

To delegate activities effectively, Toyota must assign specific duties to individuals, grant the corresponding authority to these individuals, and make sure these individuals are aware that they are obligated to perform these activities.

In encouraging the use of delegation, Toyota must be aware that obstacles to delegation may exist on the part of company managers, their subordinates, or the departments in which they work. Leadership must be sure that managers can meet the delegation challenges of discovering which obstacles exist in their work environments and taking steps to eliminate them. If Toyota managers are to be successful delegators, they also must be willing to consider the ideas of subordinates, allow them the free rein necessary to perform their assigned tasks, trust them, and help them learn from their mistakes rather than instituting unreasonable penalties.

Centralization implies that few job activities and little authority have been delegated to subordinates; decentralization implies that many job activities and much authority have been delegated. Toyota leadership will have to determine the best degree of delegation for subordinates regarding all job activities. For guidelines, Toyota leaders can rely on certain rules of thumb that say greater degrees of delegation will be appropriate for the company (1) as departments become larger, (2) as manufacturing facilities become more geographically dispersed and diversified, and (3) as the needs for quick decision making and creativity increase.

The Massey-Ferguson decentralization situation could provide Toyota with many valuable insights on what characteristics the decentralization process within the company should have. First, managers should use specific guidelines to decide whether their situation warrants additional decentralization. In general, additional delegation will probably be warranted within the company as the competence of subordinates increases, as managers’ confidence in their subordinates increases, and as more adequate and reliable decision-making information within the company becomes available to subordinates. For delegation to be advantageous for Toyota, company managers must help subordinates learn from their mistakes. Depending on their situations, individual managers may want to consider supplementing decentralization with centralization.